The trial balance of MBA Amanihunu Ltd as at 31st December, 2020 was as follows: 

GHc GHc Stated 

Capital 80,000 

Income Surplus 01/01/2020 20,000 

Plant and machinery @cost 155,000 

Plant and machinery accumulated depreciation 50,000 

Trade receivables and payables 30,000 5,000 

Inventory 01/01/2020 10,000 

Bank 3,400 Turnover 150,000 

Printing and Stationery 10,000 

General provision for doubtful debts 01/01/2020 2,000 10% 

Bank Loan repayment in 2026 18,000 

Purchases 60,000 

Selling and Distribution expenses 40,000 

Administration expenses 15,000 

Interest on Loan 1,600 325,000 325,000 

The following final adjustments are required:

i) Inventory on 31st December 2020 was valued at GHc12,000 

ii) Selling and distribution expenses owing amounted to GHc4,000 

iii) Audit fee was agreed at GHc5000 

iv) Administration expenses of Ghc6,000 were prepaid 

v) Depreciation is to be provided for plant and Machinery at 10%bbased on the reducing balance method 7 

vi) The directors declared an interim dividend of GHc1,450 and this was to be paid at the end of the year. 

vii) MBA Amanihunu Ltd produces solely for the export market and attracts corporate tax at the rate of 8% 

viii) The accountant and the sales Ledger clerks met on 31st December 2020. 

The sales ledger clerk reported that: In his opinion the following debts were bad: Kokoben Ltd GHc 2,000 Brofoyedru Ltd GHc 1,500 He considered the following debts as doubtful: Ayigya Ltd GHc 1,600 Ayeduase Ltd GHc 1,600 Kotei Ltd GHc 2,500.

The management board agreed to the comments of the sales ledger clerk as above and decided that they should write off the bad debts, make a specific provision for all doubtful debts and make a general provision of 5% of the remainder as of 31st December 2020. 

You are required to prepare: 

a. Income statement and statement of income surplus for the year ended 31st December 2020 

b. The statement of financial position as of 31st December 2020